(U.S) – The dollar experienced cautious trading on Monday as investors evaluated U.S. jobs data indicating a slowdown, raising expectations that the Federal Reserve might conclude its monetary tightening cycle.
Against a basket of currencies, the dollar dipped 0.048% to 104.18 but remained near the two-month high of 104.44 it reached on August 25.
The index had gained 1.7% in August, breaking a two-month losing streak. With U.S. markets closed on Monday, liquidity was expected to be thin, and traders were cautious about making significant bets.
U.S. jobs data sparks “Goldilocks” debate and fed speculation
Friday’s data revealed that U.S. job growth had picked up in August, but the unemployment rate had risen to 3.8%, while wage gains moderated. The economy had created 110,000 fewer jobs than previously reported in June and July.
Some analysts interpreted this as a “Goldilocks” scenario, indicating a soft landing for the economy.
Economic data showing moderating inflation and a more relaxed labor market have fueled hopes of a soft economic landing.
However, Citi strategists warned of a harder landing, suggesting that persistent wage and price inflation could lead to higher interest rates and a more substantial economic slowdown.
Investor attention was focused on several Fed officials scheduled to speak during the week for hints about the U.S. central bank’s actions at its upcoming policy meeting on September 19-20.
Markets were pricing in a 93% chance of the Fed keeping rates steady this month and a 60% probability of no more hikes this year, according to the CME FedWatch tool.
The yen strengthened 0.06% to 146.16 per dollar, while the euro and sterling saw modest gains. The Australian dollar rose 0.2% ahead of the Reserve Bank of Australia’s policy meeting, where it was expected to keep rates unchanged.
The Canadian dollar also inched up ahead of the Bank of Canada’s policy meeting, where rates were expected to be held steady.
In the cryptocurrency market, bitcoin and Ethereum experienced slight gains, with bitcoin rising to $25,997.50 and Ethereum reaching $1,638.30.